[UPDATE] Healthcare Budget is Key to End Game

By: Jim Saunders, Health News Florida
By: Jim Saunders, Health News Florida


In a critical piece of a budget deal Tuesday, Florida lawmakers will cut hundreds of millions of dollars in Medicaid payments to hospitals and nursing homes --- but will spare some other big-ticket health programs.

Combined, hospitals and nursing homes face about $700 million in cuts. That includes a 6.5 percent Medicaid rate cut for nursing homes, which industry official Tony Marshall said likely will lead to reducing direct-care or support workers in many facilities.

“We anticipate that we’ll have losses of jobs,’’ said Marshall, senior director of reimbursement at the Florida Health Care Association.

Hospitals will get hit with a 12 percent rate cut, totaling $510 million. But hospitals were relieved that lawmakers did not cut the Medically Needy and MEDS-AD programs, which serve people who have costly health issues but don’t qualify for regular Medicaid benefits.

The Senate had proposed massive cuts in the programs, which hospitals feared would shackle them with providing more uncompensated care.

“Twelve percent is a historically high cut,’’ said Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, which includes hospitals that provide large amounts of care to low-income people. “But Medically Needy and MEDS-AD were still more important to us.’’

Also, negotiators agreed to avoid cuts in adult mental-health and substance-abuse treatment programs. At one point, senators proposed eliminating almost all funding for such programs.

“We’re thrilled,’’ said Mark Fontaine, executive director of the Florida Alcohol and Drug Abuse Association. “The Senate and House saw the value of these services. We’re deeply grateful for their efforts.’’

House and Senate negotiators announced agreement on a $29.3 billion health and human-services spending plan Tuesday morning. With lawmakers facing an overall $3.8 billion shortfall for the upcoming 2011-12 fiscal year, cuts to HHS programs proved to be the thorniest issue during budget talks.

The agreement clears the way for lawmakers to end the annual legislative session on time Friday.

“We will go home on Friday, speaker,’’ House Appropriations Chairwoman Denise Grimsley, R-Sebring, told Speaker Dean Cannon during a brief budget discussion on the House floor Tuesday afternoon.

“Amen to that,’’ Cannon responded.

To reach the agreement, both chambers had to make concessions. As an example, the agreement does not include $243 million that the Senate wanted to spend on increasing Medicaid reimbursements for primary-care physicians.

Also, the agreement includes $54 million to help pay for an expected deficit next year in the Agency for Persons with Disabilities, about half of the amount the House proposed. The Senate had argued that the agency should have to make spending cuts if it runs over budget next year.

Cuts will affect dozens of programs in the six agencies that make up the HHS budget. One high-profile cut will reduce spending on biomedical-research programs from $50 million to $30 million.

Health advocates said part of the money from a 2009 increase in tobacco taxes was supposed to be used for the programs. But the House proposed cuts as a way to free up money for the Agency for Persons with Disabilities.

James Mosteller, a lobbyist for the American Heart Association, said advocates were “extremely disappointed” in the cuts. Also, Mosteller took issue with lawmakers planning to earmark half of the money for three facilities --- the H. Lee Moffitt Cancer Center, the Shands Cancer Hospital and Sylvester Cancer Center --- instead of making it available through a competitive grant process.

“There are going to be some projects across the state that are going to have to be dropped,’’ Mosteller said.

Nursing-home funding also was a closely watched issue during negotiations, with the Senate trying to avoid cuts in the homes’ Medicaid rates. But in the end, lawmakers agreed to $187.5 million in cuts.

As part of the deal, Senate Budget Chairman JD Alexander, R-Lake Wales, said lawmakers will give nursing homes more flexibility in meeting staffing requirements that were part of a 2001 law aimed at improving care.

While details were not immediately available, Marshall said he expects that each nursing-home resident will have to receive a weekly average of 3.6 hours of care a day from certified nursing assistants and nurses. That would be down from the current requirement of 3.9 hours.

Past proposals to weaken staffing requirements have spurred controversy, but Marshall said the increased flexibility would help offset a small portion of the Medicaid rate cuts.

Nevertheless, Marshall said the cuts could lead to about 40 percent of nursing homes facing operating losses next year.

“It’s going to be difficult for a number of our providers,’’ Marshall said.



As the Florida House and Senate transform the $20 billion Medicaid system, they will create winners and losers.

One winner is easy to predict. The House and Senate both want to put almost all Medicaid beneficiaries into managed-care plans, giving HMOs a flood of new customers.

But numerous other groups will have to wait for the outcome of House and Senate negotiations to find out how they fare. With those talks expected to accelerate after the Passover-Easter break, here are some groups that have a lot at stake:

Disabled people: The House and Senate agree that a mandatory managed-care system should include seniors so frail they qualify for long-term care and a vast majority of other Medicaid beneficiaries --- such as low-income women and children.

But a critical difference is that the House's Medicaid bill, which was approved March 31, also
would include people with developmental disabilities, such as autism, cerebral palsy, spina bifida and mental retardation.

Developmental-disability groups have argued they should not be included in the managed-care system. The Senate bill, which is ready for a vote in the full Senate, takes that position. But the House envisions a Medicaid system that would integrate all types of beneficiaries.

Hospitals: Looking to compete with HMOs, hospitals want to form "provider-service networks,'' a type of locally driven managed-care plan that aims to cut out the insurance middle man.

But hospitals say details of the bills could help determine whether the networks are successful. As an example, HMOs get paid a set amount of money each month to care for their members --- what is known as a capitation rate.

Hospitals, however, want to allow provider-service networks to initially get paid based on medical claims, rather than having to rely on capitated payments. That would be more like Medicaid's traditional fee-for-service system.
HMOs have argued that all types of managed-care plans should be treated the same.

The House bill would allow such fee-for-service payments for the first three years of a network's operation, but the Senate bill would not.

Medically Needy: Senate leaders want to give the Medically Needy program a less-catchy, less-empathetic new name --- the "Medicaid nonpoverty medical subsidy."

A new name is only a symptom of the huge change the Senate wants to make in the program, which covers people who don't normally qualify for Medicaid but who have extremely costly illnesses that are beyond their means. The Senate would continue providing physician services to people in the Medically Needy program, but would cut off funding for hospital and drug costs.

The House has adamantly opposed the cuts and is backed by the hospital industry. They argue that Medically Needy recipients will still need expensive treatment, which would force hospitals to provide more uncompensated care.

Trial lawyers and doctors: Across the Capitol this spring, trial lawyers are scrambling to fend off bills that would limit lawsuits against doctors, hospitals, nursing homes and other types of health providers.

The House and Senate Medicaid bills include such limits, but to far-different degrees. Both bills would place new limits on damages in malpractice cases against physicians who treat Medicaid patients.

Senators, however, would go further by shielding nursing homes and other groups, such as developmental-disability service providers, from costly lawsuits. It remains unclear whether lawmakers will include such liability issues in the ultimate Medicaid bill or deal with them in separate measures.

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